Note 12 - Income Taxes

12 Months Ended

Dec. 31, 2013

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

12.     Income Taxes

At December 31, 2013, we have a consolidated federal net operating loss (“NOL”) carryforward of approximately $62.4 million, available to offset against future taxable income which expires in varying amounts in 2014 through 2033. Additionally, we have approximately $799,000 in research and development (“R&D”) tax credits that expire in 2022 through 2033 unless utilized earlier. No income taxes have been paid to date.

As a result of the Merger discussed in Note 7, our NOL carryforward increased substantially due to the addition of historical NOL carryforwards for Dauphin Technology, Inc. However, Section 382 of the Internal Revenue Code contains provisions that may limit our utilization of NOL and R&D tax credit carryforwards in any given year as a result of significant changes in ownership interests that have occurred in past periods or may occur in future periods.

Deferred income taxes reflect the net effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of our deferred tax assets and liabilities included the following at December 31, 2013 and 2012:

	2013			2012
Deferred tax assets:
Net operating loss carryforward	$	21,971,742		$	24,428,215
Research and development tax credit carryforward		799,248			785,201
Stock-based compensation expense		2,233,909			2,097,194
Total deferred tax assets		25,004,899			27,310,610
Deferred tax liabilities
Depreciation		(2,019	)		(14,869	)
Total deferred tax liabilities		(2,019	)		(14,869	)
Net deferred tax assets		25,002,880			27,295,741
Valuation allowance		(25,002,880	)		(27,295,741	)
	$	-		$	-

We have established a full valuation allowance equal to the amount of our net deferred tax assets due to uncertainties with respect to our ability to generate sufficient taxable income to realize these assets in the future. A reconciliation of the income tax benefit on losses at the U.S. federal statutory rate to the reported income tax expense is as follows:

	2013			2012			2011
U.S. federal statutory rate applied to pretax loss	$	(776,881	)	$	(725,948	)	$	(797,921	)
Permanent differences		3,138			2,674			4,216
Research and development credits		14,047			21,236			32,675
Change in valuation allowance		759,696			702,038			761,030
Reported income tax expense	$	-		$	-		$	-